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Fidelity (FIS) Q4 Earnings Meet Estimates, Revenue Up Y/Y
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Fidelity National Information Services Inc.’s (FIS - Free Report) fourth-quarter 2016 adjusted earnings per share from continuing operations came in at $1.14, in line with the Zacks Consensus Estimate. Earnings improved 22.6% from the year-ago quarter figure of 93 cents.
Higher revenues and escalating expenses were recorded. Further, the company remains highly leveraged.
Net earnings were $216 million or 63 cents in the reported quarter compared with $111 million or 36 cents in the prior-year quarter.
For 2016, adjusted earnings per share from continuing operations came in at $3.82, marginally lagging the Zacks Consensus Estimate of $3.83. Earnings jumped 18.6% from the year-ago quarter. Further, net earnings were $590 million or $1.74 per share compared with $651 million or $2.24 in the prior year.
For 2016, revenues were $9.24 billion, up 40% year over year; but broadly missed the Zacks Consensus Estimate of $9.39 billion
Revenues of $2.45 billion surged 30.3% year over year; but slightly lagged the Zacks Consensus Estimate of $2.47 billion.
Organic revenue growth was 4.8% in the quarter.
Selling, general and administrative expenses came in at $460 million, up 20.1% year over year.
Segment wise, Integrated Financial Solutions revenues grew 11.1% year over year to $1.2 billion. Revenues from Global Financial Solutions were up 51.6% year over year to $1.1 billion.
Adjusted EBITDA grew 15.2% year over year to $846 million, while EBITDA margin was 34.4%.
Balance Sheet & Cash Flow
Fidelity’s balance sheet remained highly leveraged at the end of the reported quarter. As of Dec 31, 2016, cash and cash equivalents were $683 million compared with $682 million as of Dec 31, 2015. Debt outstanding was nearly $10.5 billion.
In the quarter, net cash provided by operations was $583 million and free cash flow was $435 million.
Fidelity National paid dividends worth $86 million in the quarter.
Guidance for 2017
Fidelity projects organic revenue growth to be in the range of2–3%, while reported revenue growth is estimated in the range of 1–2%.
Adjusted earnings per share are expected to be in the band of $4.15–$4.30 compared with $3.82in 2016.
Adjusted EBITDA is expected in the range of $3.04–$3.12 billion.
Our Take
Fidelity enjoys a dominant position in the financial and payments solutions business, backed by its robust product portfolio. We believe that the company is well positioned to benefit from increasing investment in mobile banking.
The SunGard acquisition is anticipated to supplement its strength beyond the traditional retail to institutional and wholesale financial technology and enhance its product portfolio.
Increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and uncertain regulatory environment are the primary headwinds in our view.
Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise
Riding on higher revenues, Visa Inc. (V - Free Report) posted first-quarter fiscal 2017 (ended Dec 31, 2016) earnings per share of 86 cents per share, handily beating the Zacks Consensus Estimate of 78 cents. Also, the bottom line improved 7% year over year. Results were driven by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions. Notably, USAA and Costco volumes continued to drive the U.S. credit growth.
Total System Services, Inc.’s fourth-quarter 2016 operating earnings per share (EPS) of 69 cents (adjusting for share-based compensation) beat the Zacks Consensus Estimate of 65 cents. In addition, it improved 30.2% year over year. Better-than-expected results were mainly due to higher revenues, partially offset by higher expense. Except international services, net revenue increased in all other segments.
Another peer – Fiserv, Inc. – is expected to release results on Feb 8.
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Fidelity (FIS) Q4 Earnings Meet Estimates, Revenue Up Y/Y
Fidelity National Information Services Inc.’s (FIS - Free Report) fourth-quarter 2016 adjusted earnings per share from continuing operations came in at $1.14, in line with the Zacks Consensus Estimate. Earnings improved 22.6% from the year-ago quarter figure of 93 cents.
Higher revenues and escalating expenses were recorded. Further, the company remains highly leveraged.
Net earnings were $216 million or 63 cents in the reported quarter compared with $111 million or 36 cents in the prior-year quarter.
For 2016, adjusted earnings per share from continuing operations came in at $3.82, marginally lagging the Zacks Consensus Estimate of $3.83. Earnings jumped 18.6% from the year-ago quarter. Further, net earnings were $590 million or $1.74 per share compared with $651 million or $2.24 in the prior year.
Revenue Surged; Expenses Escalated
For 2016, revenues were $9.24 billion, up 40% year over year; but broadly missed the Zacks Consensus Estimate of $9.39 billion
Revenues of $2.45 billion surged 30.3% year over year; but slightly lagged the Zacks Consensus Estimate of $2.47 billion.
Organic revenue growth was 4.8% in the quarter.
Selling, general and administrative expenses came in at $460 million, up 20.1% year over year.
Segment wise, Integrated Financial Solutions revenues grew 11.1% year over year to $1.2 billion. Revenues from Global Financial Solutions were up 51.6% year over year to $1.1 billion.
Adjusted EBITDA grew 15.2% year over year to $846 million, while EBITDA margin was 34.4%.
Balance Sheet & Cash Flow
Fidelity’s balance sheet remained highly leveraged at the end of the reported quarter. As of Dec 31, 2016, cash and cash equivalents were $683 million compared with $682 million as of Dec 31, 2015. Debt outstanding was nearly $10.5 billion.
In the quarter, net cash provided by operations was $583 million and free cash flow was $435 million.
Fidelity National paid dividends worth $86 million in the quarter.
Guidance for 2017
Fidelity projects organic revenue growth to be in the range of2–3%, while reported revenue growth is estimated in the range of 1–2%.
Adjusted earnings per share are expected to be in the band of $4.15–$4.30 compared with $3.82in 2016.
Adjusted EBITDA is expected in the range of $3.04–$3.12 billion.
Our Take
Fidelity enjoys a dominant position in the financial and payments solutions business, backed by its robust product portfolio. We believe that the company is well positioned to benefit from increasing investment in mobile banking.
The SunGard acquisition is anticipated to supplement its strength beyond the traditional retail to institutional and wholesale financial technology and enhance its product portfolio.
Increasing consolidation in the banking sector, challenging environment for the Payments Solutions business and uncertain regulatory environment are the primary headwinds in our view.
Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise
Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise | Fidelity National Information Services, Inc. Quote
Currently, Fidelity has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Riding on higher revenues, Visa Inc. (V - Free Report) posted first-quarter fiscal 2017 (ended Dec 31, 2016) earnings per share of 86 cents per share, handily beating the Zacks Consensus Estimate of 78 cents. Also, the bottom line improved 7% year over year. Results were driven by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions. Notably, USAA and Costco volumes continued to drive the U.S. credit growth.
Total System Services, Inc.’s fourth-quarter 2016 operating earnings per share (EPS) of 69 cents (adjusting for share-based compensation) beat the Zacks Consensus Estimate of 65 cents. In addition, it improved 30.2% year over year. Better-than-expected results were mainly due to higher revenues, partially offset by higher expense. Except international services, net revenue increased in all other segments.
Another peer – Fiserv, Inc. – is expected to release results on Feb 8.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>